Korea Gas eyes US shale plays, targets LNG project

The state-run gas developer and supplier, known as Kogas, "will actively seek opportunities to buy good [shale-gas] assets' and will open its first US-based office in Houston by next month, Park Young-sung, executive vice president of the Resources Business Division, said in a weekend interview.

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By MIN-JEOING LEE

SEOUL -- Korea Gas Corp. is eyeing shale-gas assets in the
US and expects to invest in a liquefied natural gas project
there that will enable it to import at least another 3 million
metric tons a year of LNG, a company executive said.

The state-run gas developer and supplier, known as Kogas,
"will actively seek opportunities to buy good [shale-gas]
assets' and will open its first US-based office in Houston by
next month, Park Young-sung, executive vice president of the
Resources Business Division, told Dow Jones
Newswires in a weekend interview.

Kogas also plans to invest an estimated $1 billion in Royal
Dutch Shell's Prelude LNG project and at least $2 billion in
the Gladstone LNG project, both in Australia, Mr. Park
said.

Each project is expected to provide the
company with around 3.5 million tpy of LNG, he added.

Kogas owns a 15% stake in the Gladstone project and has agreed to take a 10%
stake in Prelude.

The South Korean government is eager to acquire overseas oil
and gas assets and diversify its energy sources.

It said in December that state-run companies, primarily
Korea National Oil Corp. and Kogas, would invest $7.8 billion
in oil and gas assets in 2012 to strengthen energy
security.

Kogas, already one of the world's biggest LNG importers,
agreed in January to buy around 3.5 million tpy of LNG from a
subsidiary of US-based Cheniere Energy Partners for 20 years
starting in 2017.

Its LNG imports from Australia are expected to soar in
coming years, from around 500,000 tpy now to 7 million tpy from
around 2016, likely making Australia one of South Korea's top
LNG suppliers.

Kogas has no specific plans drawn up or decisions made for
divesting a part of its 15% stake in the Gladstone LNG project
in Australia, Mr. Park said.

While the company has been reviewing the possibility of
selling a part of the stake to other investors - to reduce its
relatively high debt-to-equity ratio - no progress has been
made so far.

"There's no set timeframe" for the potential stake sale and
even if Kogas decides to divest a part of its stake, it won't
affect its plans to import around 3.5 million tons of LNG from
the project, Park said.

In February last year, Kogas said during a conference call
that it may sell around 10% in the Gladstone project to Korean
or Japanese companies.

Papua New Guinea remains another potential source of LNG.
Mr. Park confirmed that Kogas has formed a consortium with
Japan's Mitsui & Co. and Japan Petroleum Exploration Co. to
bid together as strategic partners in InterOil Corp.'s proposed
multi-billion-dollar Gulf LNG project.

Dow Jones Newswires

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Does exporting food cause are food percis to become higher?Well, the idea is if the world price of a good is higher than the domestic, then companies will try to get the world market price, thus raising the price of the domestic market.However, that's only half the story. The other half is it reduces the world price of the good. It sets a new equilibrium.Let's take food, for example, since you brought it up.Let's assume you have two nations in autarky (they don't trade with each other). In Nation A, the price of food is $2. In Nation B, the price of food is $6. The two nations open trade with one another. Nation A's companies are selling food to Nation B. Companies in A see percis rise based on the increase in demand from B. B's companies, not wanting to see their customer base vanish, lower percis to compete. After a while, the new equilibrium of $4 appears. So, the world price of food has fallen, reducing hunger worldwide. True, the folks in A now pay a higher price for food, but the trade with B has brought cheaper goods to their country and/or more jobs is the bustling food industry.Trade is not a one-way street.